Monday, August 9, 2010

The Building Blocks of A Start-Up

Important Drivers and Levers

Idea Conception
This is the key to starting any business. The first challenge is to come up with an idea (if you haven’t spotted one already). If you think carefully, actually you may come up with an idea reasonably quickly! Refer to my articles earlier [Home Grown Business: Part I; Mompreneurship Part I; The Early Riders]. They are a guidance as to how you can spot an opportunity and turn it into a business idea.

Finding the Right Business Partner
It is said that finding a business partner is like finding a life partner or rather more difficult than that! While choosing a co-founder/business partner there are three Cs which you should look for:
  1. Commitment
  2. Capability/Competency
  3. Character Compatibility
The task doesn’t stop here. The relationship has to be maintained through thick and thin. Any founder of a successful entrepreneur would tell you that running a start-up is a roller coaster ride; it could be an overwhelming feeling of success one day and the feeling of utmost disappointment the next day. There are a lot of things to be taken care of and it is only the co-founders at the early stage*. The initial struggle can be very stressful. Hence, finding the right co-founder is very important.

* It is advisable to have two co-founders, at the most three. Otherwise there can be chaos, and the start-up would not move fast. It is equally important to note that as far as possible, a venture should kick-off with atleast two founders; not with just one. I shall take up each of these drivers and levers in detail as separate topics.

Idea Validation/Market Survey
Once you have an idea, you should do a market survey for idea validation. With social media networking, you could validate your ideas over facebook, twitter or linkedin. There are some free market survey tools also available on the internet which you can use the to gauge the perception of your target customers about the product/service that you are going to launch.

Managing the Seed Capital
How have you decided to fund your initial cost? That means, how do you plan to fund the initial stage of product development/website development/cost for forming the company etc. Usually people meet these initial expenses from either their savings and/or borrow from friends and relatives. But it is always advisable not to put in a lot of your own money. Neither is it advisable to rope in the investors at a very early stage. Instead you should work out a way to bootstrap your company.

Naming and Formation of The Company
What’s in name? Sometimes a lot. Naming of the company should be done very carefully, because [if selected properly] it will help create a place in users’ mind associated with your product/service. Refer to my article earlier, Mompreneurship: Part I. Julie-Aigner Clark’s choice of name ‘Baby Einstein’ had a very important  role in making her product a success. Imagine, which mother wouldn’t like her child to be smart and genius like Einstein? Though Julie-Aigner Clark never claimed that her videos will make toddlers smarter, but the name is catchy enough for the mothers to go for the product.

Execution : Revenue Generation & Cost Minimization
You could have an idea, dream about being your own boss, running your own venture, etc. etc., but nothing happens unless it is executed properly. Any one of the levers pressed wrongly can lead to disastrous results with a start-up. Execution would entail some of the following key functional areas:
- Selling
- Recruiting
- Getting Funds
- Expanding the business

It doesn’t matter even if you operate from a ramshackle house/room to start with. It doesn’t matter if your website lacks all the frills . Your concentration should be more on generating sales. The key mantra should be Sell! Sell! Sell! You should concentrate on offering the best of your product and/or service to your customers. It will help in spreading the word [the word-of-mouth phenomenon of marketing] about your product/service and hence increase revenues. Your target should be to achieve the desired financial targets, so as to persuade the investors in, and hence go on to the expansion phase of your business. [Refer to my Interview with Jyoti Ramnath, Q#3].

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